Retailers

Amazon, Whole Foods Offer Big Savings to Prime Customers

The Lempert Report: The Prime credit card’s new 5% cash back feature on grocery purchases could be difficult for other retailers to match

Amazon’s announcement that its co-branded Amazon Prime Rewards Visa credit card will now offer 5% cash back rewards on all purchases at Whole Foods is just one more incentive to gain market share.

The $99 per year Amazon Prime membership is quickly becoming the most valuable membership for shoppers with free same-day delivery in some areas, two-day shipping, and unlimited streaming of movies, T.V. shows, books, magazines and music. The no-fee Amazon Prime Visa also gives consumers 2% back at restaurants, gas stations and drugstores, and 1% back on all other purchases with an instant $70 Amazon gift card upon approval.   

Offering this discount by using this credit card, which undoubtedly many Whole Foods shoppers will start to do, will also give Amazon-Whole Foods the important tool that has been lacking: shopper data from Whole Foods, which will then enable the retailer to target special offers and more.

IBM’s Customer Loyalty Trends Report points to three trends that are accelerating the growth of these programs: personalization, omnichannel and connected devices. Amazon arguably is the leader in personalization that, according to the IBM report, is “offering the right incentive, in the right amount, targeting the right behavior, in the right channel, at the right time." It goes without saying that Amazon’s omnichannel grocery strategy is now well ahead of the competition, with Whole Foods, Amazon lockers, Amazon.com and delivery.

The USDA has created four food plans: thrifty, low-cost, moderate cost and a liberal plan. The liberal plan most closely matches what the Whole Foods shopper would purchase, and for a family of four—with two children between 2 and 5 years old—the average monthly spend for food at home, as of January 2018, is $1,097.30 per month, or $13,167.60 annually. The savings of $658.38 is probably understated, as the Whole Foods shopper is more inclined to spend more on organics and other higher-priced foods.

There is little doubt that Amazon’s approach to building a relationship with Whole Foods shoppers is based on value and rewards, and will be hard to match from other grocery retailers.

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